Free Markets, Free People

Daily Archives: April 25, 2012


Why it’s pointless to argue with the left, summarized in 33 seconds

As the blue social model collapses, it’s most vocal defenders continue their retreat into delusion. This 33 second segment of a video from Reason TV is one of the more jaw-dropping examples.

Communism caused 3/4 of a century of deprivation, misery, and quasi-slavery, and killed 100,000,000 in the bargain. The left still hasn’t come to terms with that. I’m pretty sure they never will.

You could sit the woman in the video down and present her with a mountain of evidence that Cuba is a sick society, a poor society, a repressive society in which citizens who oppose the Cuban government the way she opposes the US government are locked up for most or all their life. It wouldn’t matter. She has constructed an elaborate fantasy in her head.

After all she’s "seen Cuba" and it sounds like she really loved the role of the useful idiot being shown the potemkin society the Cuban appartchiks allowed her to see. She thereby proves to herself how moral she is, and how much better and smarter she is than we skeptics who have seen the pictures of real Cuban healthcare, cockroaches and all, smuggled out by people who would have been shot or imprisoned if they had been caught with those pictures.

You can see it in her face, and hear it in her voice – that condescension that reveals her inner conviction that she’s smart and moral, and other people ought to think exactly the way she thinks, even though to anyone connected to reality, she’s clearly delusional.

Deep down in her own mind, where she never dares go, some part of her knows that it’s a delusion and a fantasy. Because otherwise, she would want to live in this paradise she describes. She and thousands would be taking whatever measures they could come up with to go and live there, instead of it being the exact opposite, with thousands upon thousands risking their lives on makeshift boats to get out. Consciously, she spins her fantasy about how wonderful Cuba is, but subconsciously, she never dares think about actually living there.

One of the main reasons leftists talk this way is partially to convince themselves. Reality intrudes more every day as the blue social model breaks down. But facing that failure means admitting a lifetime of being a gullible fool. Most of them don’t have the psychic strength for that. They can’t admit that there’s a single thing wrong with the leftist worldview.

For example, they’ve also never come to terms with the housing bubble and the government’s role in it. They prefer to believe that a financial industry that had intelligently managed home mortgages for decades just collectively lost its mind and started writing bad loans, and the government actions that took place in the same period are complete coincidences. The pressure towards "affordable housing", the implicit and explicit threats by government to those who didn’t loan to minorities, the pipeline to offload the risk to quasi-government agencies – they look directly at those things, and apparently suffer inattentional blindness because they just can’t see them.

They’ve never come to terms with the fact that the worst areas of the country are those that have been governed by liberal and leftist Democrats for decades – including a crumbling city that was once one of America’s shining success stories, now undone by unions, liberalism, bureaucrats, and corruption.

They look at exponential curves that foretell the collapse of Social Security and Medicare, and bleat about how we just have to make the rich pay their "fair share", blind to the fact that the top ten percent already pay 70% of income taxes.

You can’t even tell them that Bush didn’t really hold a plastic turkey. They formulate their narratives and talking points, and that’s the end of their cognitive effort. They have thereby constructed a fantasy world they prefer to live in.

In that world, Cuba really does have superior healthcare and free elections.

Europe is advanced and stable, a beacon for the rest of the world, not an aging society that is broke, with an unsustainable welfare state and a birth rate that spells disaster in a generation.

China is a sterling example of how wonderful things can be when people like them run things, not a repressive society that hides its pollution  and filth, keeps a bubble going by building ghost cities, and is facing demographic problems never seen in history on such a scale.

Israel is a nation of violent butchers, who just happen to save the sick babies of their enemies as a hobby.

And the US is a racist society, holding down minorities with trigger-happy vigilantes, instead of a country that elected a black president and has been the destination for every race and creed on the globe.

OK, let them live in their fantasy world. In the end, reality always wins. And it’s pretty clear that even the reality of a total meltdown of the blue social model isn’t going to make them re-examine their fantasies, any more than the meltdown of the Soviet Union did. As I said, they don’t have the psychic strength to face it.

They prefer groupthink to reality, because confronting reality means confronting their worst fear: that they might be wrong, that they might not be smarter than the rest of us. That they might be frauds who can talk or write, but who can’t think.

So let them be. Laugh at them if you like; there’s plenty of humor to be found in their floundering, and goodness knows we need humor to get through the mess they’ve put us in. But don’t let them induce you to waste your time by trying to disprove their fantasies. That’s a lost cause.


Obama administration tries to kill the family farm

In 1960, the Democratic Party platform included the following in reference to agriculture in the US:

"The right of every farmer to raise and sell his products at a return which will give him and his family a decent living."

We shall take positive action to raise farm income to full parity levels and to preserve family farming as a way of life.

We shall put behind us once and for all the timidity with which our Government has viewed our abundance of food and fiber.

We will set new high levels of food consumption both at home and abroad.

As long as many Americans and hundreds of millions of people in other countries remain underfed, we shall regard these agricultural riches, and the family farmers who produce them, not as a liability but as a national asset.

Of course, in 1960, as today, children of farm families were an integral part of the success of family farms of that era.  And, in 1960, that was apparently just fine with Democrats.  Their labor many times made the difference in the farm surviving and flourishing.  And the children learned the business and the work ethic necessary for the family farm to thrive and survive.

But apparently the party’s position has evolved over the years to one that is now anti-family farm.  How else do you explain this?

The Department of Labor is poised to put the finishing touches on a rule that would apply child-labor laws to children working on family farms, prohibiting them from performing a list of jobs on their own families’ land.

Under the rules, children under 18 could no longer work “in the storing, marketing and transporting of farm product raw materials.”

“Prohibited places of employment,” a Department press release read, “would include country grain elevators, grain bins, silos, feed lots, stockyards, livestock exchanges and livestock auctions.”

The new regulations, first proposed August 31 by Labor Secretary Hilda Solis, would also revoke the government’s approval of safety training and certification taught by independent groups like 4-H and FFA, replacing them instead with a 90-hour federal government training course.

More government intrusion.  Private organizations such as the FFA and 4-H club that have, for decades, successfully done safety training and certification are now to be stripped of that ability in favor of a 90 hour course taught by the same government that gave us the TSA.  And, of course, with any government training, you have to wonder how much it will cost and how much of it will be worthwhile training and how much indoctrination.

Farm children have, for literal centuries in this country, worked side by side with their fathers and mothers to make a very difficult and labor intensive family businesses succeed.   But the nanny state would now prohibit them from doing most of what they’ve traditionally involved themselves in because, well, nanny knows best, doesn’t she?

Of course farm families have a vested interest in insuring their children remain safe and able to work.  It is of no advantage at all for a farm family to have their children do things in which there’s a high likelihood of them being killed or maimed.  And, again, for centuries, they’ve been able to manage and determine what is or isn’t within the abilities of their children to do safely.

Additionally, over those centuries, private and independent groups like the FFA and 4-H have been developed and supported by farm families to ensure their children are properly trained in the safety, husbandry and farming skills so necessary to make the family farm a success and to make the US the breadbasket of the world.

Now we have government unilaterally intruding in an area that it really has no business.  And it is a Democratic administration doing so … one I’m sure that would tell you, out of the other side of their mouth, that they are the party of the family farmer.

Nanny, with the supposed best of intentions, is about to take down another industry with its unwanted meddling.

And yet, there are those who will attempt to support this intrusion as something necessary to safeguard the children. 

It is a travesty, it is unwanted by those it is being imposed upon and it will, in the end, kill the family farm for good.

But you knew that.

And so do they.

Big Agribusiness says “thanks”.

~McQ

Twitter: @McQandO


Sen. Democrats can’t produce a budget, but they can still find ways to raise taxes and redistribute income

The latest vote buying scheme?  If you’re a small business man who owns an S-chapter corporation (that would be me), read it and weep:

Congressional Democrats and the White House have agreed to pay for a bill to freeze student loan interest rates for a year by raising taxes on so-called S Corporations, according to a top Senate Democrat and senior House and Senate aides, but Republicans said the tax increase may ensure the bill’s defeat in the Senate.

“We’ve got it worked out,” Senate Health, Education, Labor and Pensions Committee Chairman Tom Harkin, D-Iowa, said on Tuesday of the formula for paying for the legislation. Harkin spoke after Senate Majority Leader Harry Reid, D-Nev., said he will introduce within the next day a bill to prevent interest rates from doubling to 6.8 percent on July 1. That sets up Senate action on the bill next month after senators return May 7 from a one-week recess. A spokesman for House Minority Leader Nancy Pelosi, D-Calif., said she and House Education and Workforce ranking member George Miller, D-Calif., also signed off on the proposal.

The bill will require S Corporations with three or fewer shareholders who declare income of at least $250,000 a year to pay employment taxes, according to Harkin and Democratic staffers involved in the talks. An S Corporation is a specially structured entity that pays taxes under rules that allow earnings or losses to be passed through shareholders, reducing federal tax payments.

That’s right, S corps would be taxed to help keep interest rates on student loans down.  Remember, the government now owns student loans. 

And what have we looming right after the July 1st interest rate increase that might be hurt if that happens?

Why the November presidential election, of course.

Any wonder why the White House and Democrats are all for screwing small business to buy off a critical constituency?

It is no different in the category of desired political result than the $8 billion in spending HHS would do at the behest of the White House to slide the Medicare supplemental cost increase seniors will undergo from before the election to after.

This is outrageous.  This is blatant vote buying and income redistribution to “pay” for Obama’s re-election.  This is the essence of the Democratic ideology laid bare and the deviousness  and immorality of their methods exposed for all to see – if they’ll see it.

No one makes anyone take out a student loan.  And although it may be expensive, decades worth of those who’ve gone before have acted like adults and paid off the obligations they agreed too.

Now, if the Democrats get their way, it will be the job of those who’ve risked all to open a small business and built it with sweat equity and delayed gratification to pay to keep government controlled interest rates down?

“I don’t think anybody believes this interest rate ought to be allowed to rise,” Senate Minority Leader Mitch McConnell, R-Ky., said Tuesday. “The question is, how do you pay for it? How long do you do the extension?”

Republicans are “in the process of discussing it among ourselves,” McConnell said.

Don’t even think about it Mr. McConnell!  If, as Obama has said, it is wrong to raise taxes in an economic downturn, it is ALWAYS wrong.  And if you think we’ve turned the corner economically, you’re not paying attention.

Government decided to take over the student loan business and now government can suffer the consequences of its actions.  I have no desire or intent to bail it out.

If this doesn’t make you angry as hell then I’m fairly certain which lever you’re pulling in November. 

~McQ

Twitter: @McQandO


Why Obama’s war on oil speculators is economic poppycock (onions or corn?)

Economist Dr. Mark Perry has a series of posts at his blog Carpe Diem which makes the case that “speculators” play and key and positive role in commodities markets.

One of the more intriguing posts deals with onions and oil.  Oh, and corn.   Perry quotes a 2008 Fortune magazine article:

"Before the government starts scrutinizing the role that speculators may have played in driving up fuel and food prices, investigators may want to take a look at price swings in a commodity not in today’s news: onions.

The bulbous root is the only commodity for which futures trading is banned. Back in 1958, onion growers convinced themselves that futures traders were responsible for falling onion prices, so they lobbied an up-and-coming Michigan Congressman named Gerald Ford to push through a law banning all futures trading in onions. The law still stands.

And yet even with no traders to blame, the volatility in onion prices makes the swings in oil and corn look tame, reinforcing academics’ belief that futures trading diminishes extreme price swings."

The proof is in the charts.  The first chart compares the volatility in the onion market, in which futures trading was banned, with that of the oil market.

onions

 

Compare the mean and standard deviation differences in the two markets.  Remember blue – no futures trading.  Red – futures trading.

So, you say, comparing onions and oil is like, well, comparing onions and oil!   OK, how about onions an corn.  Again the same difference applies.  No futures trading for onions but there is with corn.

Result?  The same:

corn

The point, of course, is those futures contracts help moderate a market.  Or as Perry says:

The fact that the volatility of onion prices is so much greater than the volatility of corn prices lends further statistical support to the notion that markets with futures trading like corn have lower price volatility than markets without futures contracts like onions.

Bingo.  So, the President’s war on “oil speculators” is an obvious distraction.  But here’s the other side of that – if successful, you may end up seeing oil act like onions.  Is that something most of us would prefer?  Given these facts, it seems the height of folly to attempt to regulate or ban futures trading in oil, doesn’t it?

A few more charts to finish the point.  First, futures trading in natural gas:

natgas

If oil speculation (or, as implied, greed) is the cause of rising oil prices, why aren’t natural gas prices rising as well in futures trades (not as “greedy”)? 

In fact, it is because of “speculators” that we’ve seen the price of natural gas go down.  So futures markets do what?  They react to market signals on supply and demand.  What this tells us is we most likely have an over abundance of natural gas.

So what does the market do? It adjusts the price to the reality of the supply v demand – in this case, the price goes down.  And it also does things like this:

rigs

When natural gas price were up and oil prices down, more drilling rigs were allocated by those markets to natural gas.  As oil prices have risen dramatically recently, while natural gas prices have fallen, there’s been just as dramatic a shift in the allocation of drilling rigs from natural gas to oil.

The success in the natural gas sector has driven supply up while demand has yet to increase proportionately.  Meanwhile, we’d had an abundant supply of oil, which has now become very tight (geopolitics, folks – governments at work and war) driving up the price of crude.  The market is reacting.

And as it reacts, guess what?

cme2

Crude futures are down as they obviously see future supply growing as the market adjusts and reacts.  All driven by “speculators” who are, right now, in the middle of moderating the market.

So, as President Obama continues with his “blame the speculators” nonsense, you have a choice. 

Onions or corn?

Markets or bureaucrats?

PS – if you’d like to read some academic pieces on why “speculators” are a key to a market economy, read this.

~McQ

Twitter: @McQandO

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